CHARLESTON, W. Va. – The federal government said Friday it will open an investigation into a West Virginia chemical spill that shut down much of the state's capital and put 300,000 residents at risk.

Schools and restaurants closed, grocery stores sold out of bottled water, and state legislators who had just started their session canceled the day's business after a chemical spill in the Elk River in Charleston, even as the extent of the danger remained unclear.

The federal government joined the state early Friday in declaring a disaster and announced an investigation into the spill, while the West Virginia National Guard planned to distribute bottled drinking water to emergency services agencies in the nine affected counties.

Shortly after the Thursday spill from Freedom Industries hit the river and a nearby treatment plant, a licorice-like smell enveloped parts of the city, and Gov. Earl Ray Tomblin issued an order to customers of West Virginia American Water: Do not drink, bathe, cook or wash clothes with tap water.

Freedom Industries says it doesn't know how much of a chemical spilled from its plant in Charleston into the Elk Rive, but that it's working to contain the leak and prevent further contamination.

Joe Leonoro, who works at Leonoro’s Spaghetti House, told FoxNews.com he first noticed the smell at 6 p.m. Thursday night, right after he watched a news report on the development.

"I knew what I was smelling, but I didn't think it would hurt the community like this," he said.

Leonoro said his Charleston restaurant will lose "a substantial" amount of money while closed today, but he said his small business joins many others.

"Laundromats, hair dressers, restaurants…you don't realize how many people are impacted," he said.

The chemical, a foaming agent used in the coal preparation process, leaked from a tank at Freedom Industries and overran a containment area.

Officials say the orders were issued as a precaution, as they were still not sure exactly what hazard the spill posed to residents.

The tank that leaked holds at least 40,000 gallons, said Tom Aluise, a state Department of Environmental Protection spokesman. "We're confident that no more than 5,000 gallons escaped," he said. "A certain amount of that got into the river. Some of that was contained."

Agency officials do not know how long the chemical had been leaking, Aluise said in a telephone interview. There was a breach in a concrete wall that served as a containment area to prevent spills from leaving the storage site, he said.

"Our understanding is it's not an especially toxic material. It's not dangerous necessarily to be around," he said.

According to a fact sheet from Fisher Scientific, the chemical is harmful if swallowed -- and could be so if inhaled -- and causes eye and skin irritation.

Freedom Industries will be responsible for cleanup at the site, Aluise said.

"I don't know if the water is not safe," water company president Jeff McIntyre said. "Until we get out and flush the actual system and do more testing, we can't say how long this (advisory) will last at this time."

McIntyre said the chemical isn't lethal in its strongest form. Kanawha County emergency officials said the chemical is called 4-methylcyclohexane methanol.

The emergency declaration involves customers in all or parts of the counties of Kanawha, Boone, Cabell, Clay, Jackson, Lincoln, Logan, Putnam and Roane. State Department of Education spokeswoman Liza Cordeiro said schools in at least five of the counties will be closed.

The smell from the spill -- similar to licorice or cough syrup -- was especially strong at the Charleston Marriott hotel a few blocks from the Elk River, which flows into the Kanawha River in downtown Charleston. The Marriott shut off all water to rooms, and then turned it back on so guests could flush toilets. Each guest was given two 16.9-ounce bottles of spring water upon returning to the hotel.

About 50 miles away in the unaffected city of Huntington, a hotel offered free showers for those affected.

Even as the National Guard made plans to mobilize at an air base at Charleston's Yeager Airport, many people -- told to use water only for flushing toilets -- weren't waiting for outside help. For instance, the Federal Emergency Management Agency was planning to deliver more than a million liters of water from nearby Maryland, but the first shipments were not expected to arrive until Friday night.

Once word got out about the governor's declaration Thursday, customers stripped store shelves in many areas of items such as bottled water, paper cups and bowls. As many as 50 customers had lined up to buy water at a convenience store near the state Capitol in Charleston.

"It was chaos, that's what it was," cashier Danny Cardwell said.

State Attorney General Patrick Morrisey warned residents about price gouging on water, ice and other items, calling it "just plain wrong" to inflate prices and encouraging those who've seen such practices to report them to his office's consumer protection division.

Although the governor noted that the water advisory extended to restaurants, hospitals, nursing homes and other establishments that use tap water, state public safety spokesman Lawrence Messina said Friday that he wasn't aware of any hospitals closing and that medical centers "seemed to have adequate water supply, at least for the short term."

At the Little India restaurant in Charleston, about 12 customers were asked to leave when bar manager Bill LaCourse learned about the shutdown notice.

Karlee Bolen, 16, of Charleston, said her family, including her parents, two sisters and brother, were considering the possibility of heading to her grandmother's home in Braxton County, where tap water was unaffected, an hour to the northeast.